European bourses opened on a cautious note on Wednesday despite gains on Wall Street and in Asia as investors await a U.S. Federal reserve meeting and assess the political implications of Donald Trump’s setback in a bitter Senate election in Alabama.
The pan-European STOXX 600 slipped 0.1 percent with Paris, Frankfurt and London trading in negative territory.
“Last night’s new U.S. records aren’t expected to translate through to this morning’s open in Europe, where the underlying sentiment is likely to be caution ahead of today’s Fed meeting and tomorrow’s Swiss National Bank, Bank of England and European Central Bank rate meetings”, CMC Markets analyst Michael Hewson said before markets opened.
The pace at which these central banks intend to tighten and normalise monetary policy is seen as a key factor in maintaining the current bull market in 2018.
Higher interest rates are also expected to lift banks stocks, whose revenues and profits have suffered from the historically low cost of borrowing money.
Financials sector was the best performing sector, with HSBC leading the pack up 1.6 percent.
Swedish builder NCC posted the worst performance of the index, falling more than 8 percent after it warned on Wednesday its operating earnings for the fourth quarter would be “close to zero”.
Supermarket group Colruyt followed with a 3.7 percent fall after Barclays cut its target price for the stock.
There was also disappointment at the earnings of Aurubis NAFG.DE>, Europe’s biggest copper smelter, which slid 2.2 percent.
Telecom Italia was the worst performer in Milan, losing 1.9 percent ahead of a meeting between its CEO Amos Genish and Industry Minister Carlo Calenda when a possible spin-off of the fixed-line network could be discussed.
In the UK, industrial-equipment hire company Ashtead gave back its gains of the previous session, losing close to 5 percent after Citi cut its rating for the stock.
Shares in British electrical goods and mobile phone retailer Dixons Carphone was the best performer, adding 6 percent after reporting record Black Friday sales.
Zara fashion chain owner Inditex rose by almost 4 percent after reporting net profit to September of 2.3 billion euros, a 6 percent gain.
Source: Reuters (Reporting by Julien Ponthus; editing by Tom Pfeiffer and Richard Balmforth)